Payment Changes for Hip and Knee Replacements Coming in 2016

In 2014, more than 400,000 Medicare beneficiaries received a hip or knee replacement, costing more than $7 billion for the hospitalizations alone. Despite the high volume of these surgeries, quality and costs of care for these hip and knee replacement surgeries still vary greatly among providers. For instance, the rate of complications, like infections or implant failures, after surgery can be more than three times higher for procedures performed at some hospitals than others. And the average total Medicare expenditure for surgery, hospitalization, and recovery ranges from $16,500 to $33,000 across geographic areas.

Today, the Centers for Medicare & Medicaid Services finalized the Comprehensive Care for Joint Replacement (CJR) model, set to begin on April 1, 2016, which will hold hospitals accountable for the quality of care they deliver to Medicare fee-for-service beneficiaries for hip and knee replacements and/or other major leg procedures from surgery through recovery. Through this payment model, hospitals in 67 geographic areas will receive additional payments if quality and spending performance are strong or, if not, potentially have to repay Medicare for a portion of the spending for care surrounding a lower extremity joint replacement (LEJR) procedure.

The model’s goal is to give hospitals a financial incentive to work with physicians, home health agencies, skilled nursing facilities, and other providers to make sure beneficiaries get the coordinated care they need. Today, beneficiaries receive care from many providers and suppliers, with each having their own coordination efforts. This can lead to confusion and in some cases, multiple care plans and instructions for beneficiaries that conflict and can lead to re-hospitalizations and complications. CMS will help hospitals improve care delivery and care coordination by providing spending and utilization data and facilitating the sharing of best practices.

“This model is about improving patient care. Patients want high quality, coordinated care -- not just for a day, but for an entire episode of care. Hospitals, physicians, and other providers who work together can be successful and improve care for patients in this model, and CMS will help providers succeed,” said Patrick Conway, M.D., CMS’ principal deputy administrator and chief medical officer.